Posted: 09/15/2006 | Author: H. Sterling Burnett
Con: Carbon curbs will send business fleeing to friendlier states
(The writer is addressing the question, "Will California's new limits on greenhouse gas emissions help the state's economy and reduce global warming?")
WASHINGTON - Arnold Schwarzenegger's decision to sign the first statewide, multi-industry greenhouse gas emission limits may be a calculated political move to burnish his green credentials in an attempt to get re-elected governor. Or it may symbolize his sincere belief that California should take a leadership role in reducing the threat of climate change.
But whatever his motives, the results will be higher prices for California's consumers, higher unemployment for California's workers and little or no benefit for the environment.
Taking the latter point first, California's law will require companies in selected industries to reduce their greenhouse emissions by whatever amounts, and by whatever methods, are deemed necessary by the California Air Resources Board in order to reduce emissions for the entire state by 25 percent by 2020 - equaling California's 1990 emission levels.
While California is an economic powerhouse and these cuts are substantial, their effect on future climate will be nil. The National Center for Atmospheric Research reports that if all the signatories to the much more stringent Kyoto protocol - which would require industrialized countries to reduce their greenhouse gas emissions by an average of 5 percent below 1990 levels - meet their reduction targets, the earth will be between 0.07 degrees Celsius and 0.19 degree Celsius cooler than it would be absent Kyoto.
California's solo efforts to reduce global warming will be even less effective. California's wasted effort will, however, come with a high price tag. The regulations implementing California's climate bill have yet to be written, so no objective economic analysis of its effects are available.
However, an analysis of a regional climate change action plan considered by 11 Northeastern states and the premiers of Canada's eastern provinces showed that even with an efficient cap-and-trade program similar to Schwarzenegger's proposal, both electricity and residential natural gas prices would rise by as much as 39 percent by 2020.
The higher energy costs would result in consumption spending falling by an estimated average of $2,634 per household; gross state product would decline 1.1 percent; and an estimated 191,589 jobs would be lost by 2010.
The study also found that as companies fled high fuel prices in the Northeastern states, employment in the rest of the United States would increase by more than 117,000 in 2010 and by an additional 59,000 in 2020. The effect of these changes also would be highly regressive since the poorest households spend more of their income on energy compared the wealthiest households.
California's law will have similar economic costs. Many companies already have fled the state in recent years due to its poor business environment. California has a high tax burden, among the highest land values and home prices, requires employers to pay even unskilled workers relatively high wages, and it is ranked as having among the worst regulatory environments of any of the 50 states.
In addition, Californians face some of the highest energy bills in the nation - which this law will only make worse. Proponents of the law argue that it will create new jobs through investments in, and the manufacturing of, new technologies. However, these gains will not be realized in California.
Any new technologies designed to meet California's needs will likely be developed and built in other states or even other countries with less oppressive business climates and lower energy costs, then shipped to California.
Only politicians could argue that raising the cost of doing business was actually good for business. California residents may yet be saved from this mess. The affected industries are considering challenging the law in court. If these challenges fail to materialize, or fail in court, Californians can expect more blackouts and higher unemployment, food and fuel prices. All in a good day's work for politicians from the left coast.
Originally posted at http://www.sltrib.com/opinion/ci_4338378.